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Small Changes, Real Impact: Report from the BETA Project

When was the last time you thought about how the details of your program affect your clients’ behavior?

Behavioral economics is the study of how people make decisions in a complex and textured world where details matter. It draws from the fields of economics and psychology, but brings a unique perspective that departs from each of these fields in important ways. Behavioral economics differs from standard economics because it uses a more realistic (and more complex) model for how we view people. It differs from psychology because it maintains a focus on institutions and the contexts in which decisions are made.

Over the last few years, the use of behavioral economics to inform program design has taken off in the asset-building community. Behavioral economics research suggests that situations of financial stress affect people’s decisions and actions in profound ways, making it difficult for them to attain financial stability and build assets. However, small adjustments can change individuals’ behavior.

While behavioral economics is a science, applying it in the field is still an art. How can the asset-building community best apply the lessons of behavioral economics to their programs?

The BETA Project

The Behavioral Economics Technical Assistance (BETA) Project is an initiative at Prosperity Now to build the capacity of asset-building programs that want to apply lessons from behavioral economics to their own program designs. In collaboration with behavioral design firm ideas42 and with funding from the Citi Foundation, we asked the field to send us their most pressing behavioral problems and chose three sites out of 99 applications.

This report explains the human insights process used in the Smart Growth Innovation Program and provides insights gained from working with the credit counseling agencies that participated in the program.